How JustAnswer Works:

Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.

Get a Professional Answer

Via email, text message, or notification as you wait on our site.Ask follow up questions if you need to.

100% Satisfaction Guarantee

Rate the answer you receive.

Ask Anne Your Own Question

Anne, Master Tax Preparer

Category: Tax

Satisfied Customers: 1985

Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses

5242771

Type Your Tax Question Here...

Anne is online now

Regarding Form 4797, How do I report a sale on a car used for

Customer Question

Regarding Form 4797, How do I report a sale on a car used for multiple use? Standard mileage deduction was taken on Sch C and Form 2106 for several years. Should it appear as two entries on Part I since business % use varied?

Thank you for that additional information. A portion of the standard mileage allowance is considered to be depreciation, and IRS has tables that give you that depreciation adjustment. Please see below:

So for tax year 2002 for example, you claimed business miles x the applicable business standard mileage rate (for tax year 2002, that amount was 36.5 cents/business mile)

You will follow the same formula in order to make the depreciation adjustment, meaning you will now multiply the same number of business miles you used in 2002 by 15 cents/mile which is considered your depreciation for tax year 2002.

The fact that the business % changed doesn't enter into this equation (which is why tax pros such as myself are always happier when people use the standard mileage for the cars they use in business since figuring the depreciation is relatively simple) You simply use the # XXXXX business miles for each year you claimed a deduction, multiply the # XXXXX business miles you drove by the applicable amount in the IRS chart for depreciation, add them up, and that's the depreciation you report on Form 4797.

It does, thank you. But what about figuring the gross sales price and basis? Isn't the gross sales price based on % of business use (e.g. using 27% business use on Sch C and 28% on Form 2106)? And the basis determined by the lessor of FMV on the date placed in service or adjusted basis on the date placed converted asset in service? In both situations, the "date placed in service" and "% business use" differs. So would the result be two line entries of the car on Form 4797 (i.e., one resulting from Sch C depreciation and one from Form 2106 depreciation)?

Good question, and I should have anticipated this and included it in my initial answer.

You will add the business % together for each year you used the car for business, and multiply the selling price by that total. That is considered the sales price for the business portion on Form 4797, and again, this keeps this as one transaction on the Form 4797.

So, for example, if you sold the car for $12,000 and you used it for business purposes for 27% one year and 28% another, your selling cost for Form 4797 would be $6600. ($12000 x .27 = $3240 + $12000 x .28 = $3360. $3240 + $3360 = $6600)

The portion left over is considered personal and is not reported on your tax return.

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses

X

Ask a Tax Professional

Get a Professional Answer. 100% Satisfaction Guaranteed.

141 Tax Professionals are Online Now

Type Your Tax Question Here...

characters left:

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.